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Automation Business Featured General Insurance

In the realm of insurance, the concept of Uberrimae Fidae, or Utmost Good Faith, serves as the bedrock of trust and transparency between insurers and policyholders. This principle mandates complete honesty, full disclosure of pertinent information, and unwavering transparency throughout the insurance process.

Essentially, it establishes a framework for mutually beneficial relationships and fair dealings.

However, with the proliferation of customer data, rising incentives for fraud, and increasing market competition, insurers face the challenge of maintaining customer trust while remaining competitive.

This is where blockchain comes into play.

What is blockchain?

Blockchain is a decentralized ledger technology that facilitates secure and transparent recording of transactions across a network of nodes. Each transaction, encapsulated within a “block” is cryptographically linked to its predecessor, forming an immutable chain resistant to retroactive alteration.

This architecture ensures the integrity and transparency of data stored on the blockchain.

While the term has often been associated with cryptocurrencies, this represents only the tip of the iceberg in terms of its potential.

Blockchain in insurance

The integration of blockchain technology into the insurance sector holds immense promise for revolutionizing traditional processes and enhancing operational efficiency. By harnessing blockchain, insurers can streamline various facets of their operations, from policy issuance and claims processing to risk assessment and fraud detection.

The distributed ledger nature of blockchain allows insurers to store immutable and traceable records of customer data, accessible in real-time by various stakeholders.

Additionally, smart contracts enable automation of insurance processes like claim payout, triggering payments automatically when predefined conditions are met. For example, if premiums have been duly paid, and the specified peril conditions have been met, the claim will be paid out automatically.

Applications of blockchain

  • Smart contracts

Smart contracts, imbued with self-executing capabilities and predefined conditions, automate various insurance processes. This includes policy issuance, claims settlement, and premium payments, based on predetermined criteria.

Smart contracts can be implemented on the blockchain and thus allow for a self-serving mechanism requiring little to no supervision.

  • On-demand insurance

Leveraging blockchain, on-demand insurance models offer flexible coverage options that policyholders can activate or deactivate as needed, catering to evolving customer needs and providing personalized insurance solutions.

Take for instance motor coverage that is activated only when the insured alone actively drives his vehicle. Telematic data can be fed in real time into the blockchain allowing for dynamic adjustments to premiums based on usage.

  • Re-insurance

Blockchain facilitates transparent and efficient reinsurance processes by enabling real-time data sharing among insurers and reinsurers. This enhances risk assessment, claims handling, and settlement procedures, resulting in cost savings and operational efficiencies.

  • Health insurance

Blockchain enhances data sharing and management in health insurance by securely storing and accessing medical records. Real-time access to patient records by both healthcare providers and insurers speeds up claims processing and prevents fraud by ensuring data integrity.

  • Legal compliance

Blockchain aids insurers in meeting legal and regulatory obligations by securely storing and sharing customer data for KYC (Know Your Customer) and AML (Anti-Money Laundering) compliance. Moreover, it automates the generation and submission of insurance reports to regulators, ensuring timely reporting.

Final thoughts

The essence of the insurance business lies in trust between key stakeholders. Blockchain enhances this trust by securely storing data, automating processes and reducing risks (fraud).

Ready to streamline your insurance processes and focus exclusively on serving your policyholders? Discover how LenderDock’s innovative Verification-as-a-Service platform can revolutionize your operations and drive cost savings. Embrace the future of insurance today with LenderDock.

February 21, 2024
Featured General Insurance

The customer’s main objective when buying insurance is to get the finest coverage possible to safeguard their possessions. There is no such thing as “full coverage,” though, for someone’s car, house, or any other covered item—as any insurance expert will tell you. As a result, an insured person may file a claim and then be surprised to learn that it was rejected. Here are a few scenarios under which a claim may be rejected.

1. There is insufficient information in the claim

2. No coverage exists for the service

Prior to doing any work or repairs, it is usually a good idea to wait for your insurance company’s approval, as some of these activities could not be covered by your policy.

3. The late filing of the claim

Most plans include tight deadlines for when an insured must submit a claim. One may be automatically denied if it is filed after the deadline.

4. There is a duplicate claim

Erroneously filing a claim more than once may result in its denial. Although it’s usually simple to correct, it’s advisable to avoid this scenario as it may cause claim reimbursements to be delayed.

5. Previous damage is not protected

Not just health insurance is affected by pre-existing conditions. An insured party’s claim may be rejected if it contains property damage that was there before the claim incident.

6. Absence of prior consent

Verify that the insurance company does not require preapproval for any treatments rendered; if it does, you run the risk of having your claim rejected.

7. The insurance has expired

Non-payment-related coverage gaps are frequent yet preventable.

There are actions an insured can take if their claim is rejected. It is advised in certain situations that the insured:

• Fixes any mistakes and files the claim again.

• If the denial’s reasoning is unclear, get in touch with their insurance company and request a thorough justification.

• If they don’t agree with the denial, they might think about submitting an appeal. The insured should make sure to acquire any paperwork or further proof of their claim before filing an appeal.

• Seek expert assistance from a legal or claims specialist if they require more assistance. The insured can seek assistance from their state’s insurance commissioner if everything else fails.

February 14, 2024
Business Featured General Insurance

AM Best doesn’t think that Artificial Intelligence (AI) is the main reason why so many people have lost their jobs in the insurance business recently.

The credit rating agency recently said in a report that “it is too soon to cite AI as the leading cause of the job losses, at least at this nascent stage.” He said that the layoffs are more likely to be in “the cyclical, rather than the structural, category.”

The rating agency said that structural unemployment is when jobs are lost because of changes in the system, the use of technology, or a mismatch between what the business needs and what the workers can do. Employment changes caused by the business cycle are called cyclical unemployment. AM Best said, “This seems to be the case in the insurance industry.”

Recently, Liberty Mutual, American Family, and GEICO all said they were cutting staff. This new information comes after those companies. According to AM Best, the most recent layoffs have an impact on personal lines insurance the most. This will have the most impact on personal lines insurance because loss ratios and underwriting margins are being pushed down by rising climate risk, loss cost inflation, and reinsurance capacity and price.

The commentary stated that the recent layoffs by insurers alone do not indicate any pressure on ratings

AM Best did say that advances in artificial intelligence will slowly change the job outlook in the insurance business. AM Best stated that many insurance companies are testing generative AI because they think it could help them with customer service. They also said that the level of industry disruption will depend on how fast AI develops in the coming years.

AM Best also mentioned that it’s still not clear what effect generative AI will have on jobs, but it will probably change the way society works as current workers learn how to use the power of this new technology.

The Bureau of Labor Statistics says that insurance companies and other related businesses have slowed down their hiring to about 1,100 jobs in October. This was less than the number of new hires in September (3,900) and July (8,300), according to the BLS.

There have also been layoffs at insurance technology companies. Earlier this year, Hippo, Branch Insurance, Corvus Insurance, and Pie Insurance all said they were letting people go. Thimble, NEXT, Lemonade, and Root were some of the insurtechs that cut staff last year.

February 7, 2024
Business Featured General Insurance

Without having to incur the usual costs of expansion, MGAs can provide insurers with an affordable way to enter new or niche markets.

What is a managing general agent? This piece will focus on giving a clear definition of managing general agents (MGAs) instead of going into detail about their uses, history, and growth.

The following list of factors determines whether a person or thing is an MGA:

1. Anyone or any group that manages all or part of an insurance company’s business, such as the restricted administration of an insurance company’s division, department, or underwriting office; and

2. Acts as an agent for that insurer by doing the three things below, either by themselves or with other companies; this is true no matter what the agent’s title is (e.g., “agent,” “MGA,” etc.) or whether the MGA is authorized by the insurer to do these things.

A. Writes gross direct premiums equal to or greater than 5% of the insurer’s policyholder surplus (as shown in the insurer’s most recent annual statement for any given quarter or year); or

B. Underwrites gross direct premiums equal to or greater than 5% of the insurer’s policyholder surplus (as shown in the insurer’s most recent annual statement) in any given quarter or year; or

C. Either

i. Changes or pays out claims worth more than $10,000 each; or

ii. Negotiates coverage on behalf of the insurer.

In general, look at MDL 225, which is the NAIC Managing General Agents Act.

In short, an MGA is a person who oversees how an insurer does business, writes some of the insurer’s business, settles or adjusts some of the insurer’s claims, and either works with the insurer to arrange reinsurance or brings in new business. Things aren’t always so simple, though.

Unique aspects of each state

All 50 states, the District of Columbia, and the Virgin Islands may have different rules and thresholds than the Model Act. This is because the above summary is based on the Managing General Agents Act (the Model Act) of the National Association of Insurance Commissioners (NAIC, id., § 2(D)).

Based on California law’s description of MGA, for example, it looks like a person or business can be considered an MGA just by negotiating reinsurance (Cal. Insurance Code §769.81(c)). On the other hand, Texas law has a very different—possibly more literal—definition of an MGA. It only looks at whether the person or organization can accept or process policies made and sold by other agents and whether they have control over an insurer’s local agency and field operations (see §19.1202(3) of the 28th Texas Administrative Code). Surprisingly, though, the New York rule sticks much more closely to the Model Act’s description of MGA, with no clear differences – check out N.Y. Comp. Codes R. & Regs. tit. 11, §33.2 – it lowers the amount of money that can be paid out for adjusting and changing claims from $25,000 to $10,000, which is what the Model Act said.

Exceptions. Obviously, the Model Act lets some people and groups off the hook from being seen as MGAs when they might otherwise be qualified for exemptions. To give you a quick rundown of these exceptions:

1. An employee of the insurance company,

2. A U.S. branch manager stationed in the U.S. of an overseas insurance company,

3. An associated underwriting manager who oversees all or part of the insurance company’s contractual activities and whose pay is not based on the number of written premiums; or

4. An attorney-in-fact for a reciprocal insurer or interinsurance exchange subscriber acting under power of attorney.

Because of the large amount of underwriting and production that would usually be too much for one person, many MGAs are businesses rather than people. Because of this, some states, like New York, have done away with the first clause and replaced it with the third one. As for the holding company act protection, it applies to all affiliates, no matter what services they provide to the insurance company (N.Y. Comp. Codes R. & Regs. tit. 11, §33.4(a)). This move gives captive agencies and the insurers that work with them a little more room to breathe. These companies do cost-effective underwriting and claims management in-house. It was likely partly caused by the huge rise in the number of hostage agencies that have been set up and used over the years.

License terms and responsibilities

What does it mean if you’ve proven that you meet the legal standards to be an MGA in at least one state? MGAs need to keep their licenses up to date in the state where the risk is located or where the insurance is based (NAIC Managing General Agents Act, MDL 225, §3).

Granting licenses

The rules for getting a license may also be different in each state. Most of the time, the MGA will need to keep another license in addition to its production license. It might even be necessary to have extra IDs for everyone who works for the MGA. Some states, like New York, don’t have a specific type of license. For example, an MGA’s producer license gives it a license. This means that the insurer is mostly responsible for any extra registration requirements, like making sure that the right MGA-specific appointments are set up and forms are filled out and sent in (see the OGC Opinion from December 18, 2002, and the Department of Financial Services’ Managing General Agent Appointment and Termination).

Responsibility

Becoming an MGA can mean taking on a lot of duties, such as more attention from regulators, binding contracts, and reporting obligations. These may be more important than any new license standards that might or might not need to be met.

As per the Model Act, “the MGA’s actions are taken to be those of the insurer for whom it is acting… an MGA may be examined as if it were the insurer,” (see NAIC Managing General Agents Act, MDL 225, §6. To be clear, that quote is all of Section 6 of the Model Act). It basically tells MGAs that officials will take their duties very seriously. As many who have helped producers through regulatory examinations at the insurer level can tell, these exams are not right for the average producer.

Also, the Model Act has a lot of complicated rules that must be written in every contract that controls the MGA’s services, even though it is the insurer, not the MGA, that is mostly responsible for reporting.

Key points

There are without a question many good reasons to become an MGA. For starters, MGAs can be a good option for insurers that want to get into a new or niche market because they don’t have to pay the normal fees. This means that any MGA that has the tools to let the insurer enter the market in question (for example, having previously approved goods) is in a very good position to make a lot of money.

Because of this, an agent who only brings in business would never want to be seen as an MGA unless they really do the things that a state’s MGA guidelines say they should do. This is why many people are told to get rid of the words “managing general agent” or “MGA” from their insurance policies. That word doesn’t seem to change the fact that someone or something is an MGA, so why even bring up the idea that you might be providing services that are only available to MGAs?

This increases danger and scrutiny from regulators for no reason, even if it’s small. For example, if a regulator looks at an agreement with the wrong title while looking at an insurer, the regulator may investigate the producer’s responsibilities and license status. Also, using the terms incorrectly could lead to confusion about the services covered by the insurance contract when there shouldn’t be any confusion at all.

You should think about this: “Do I underwrite insurance, adjust or pay claims, negotiate reinsurance, or even just manage elements of an unaffiliated insurer’s business?” If the answer is “yes,” you should look over the laws about handling general agents in each state where you have a producer license.

February 1, 2024
Automation Featured General Insurance

Data is nothing new to the insurance sector. Underwriters and actuaries have been assessing risk and setting prices by analyzing large volumes of data for decades. But as the insurance market develops, artificial intelligence (AI) will play a bigger role in assisting insurers in remaining competitive and meeting changing client demands. Even more opportunities have arisen due to the generative AI models’ recent surge in popularity, such as OpenAI’s ChatGPT. In the following is a high-level summary of the typical insurtech effect areas, highlighting three particular businesses whose products make extensive use of AI.

Emergence of insurtech in the spotlight

Innovations in insurance firms and products that are based on technology have increased rapidly during the last five years. All these developments are referred to as insurtech. By utilizing technological breakthroughs, especially artificial intelligence (AI), insurtech is revolutionizing the traditional insurance industry. They employ AI to improve client satisfaction, optimize workflows, and deliver more individualized services. The following functional domains have been the focus of several of these technologies:

• Enhanced underwriting procedures

• Streamlined claims processing

• Increased policy flexibility and customization

• Preventing fraud

• Enhanced risk management

The insurance sector is adjusting to the world’s constant digitization. This tendency will only continue as more businesses invest in it, as we’ll cover in the sections that follow. It’s fascinating to keep an eye out for developments there.

Kin

Chicago-based Kin is a cutting-edge home insurance provider. The company was established in 2016 with the goal of giving consumers purchasing house insurance a more customized experience. Their platform offers well-informed advice on what insurance coverage is best for each property. Kin analyzes a comprehensive data set comprising over 5,000 factors about each customer and their home before making recommendations. A human underwriter could never match the speed and precision of the quotes generated by Kin’s platform. All of this is made feasible by Kin’s usage of artificial intelligence.

Standard home insurance policies frequently have the flaw of being inflexible, meaning they don’t alter when the cost of materials and houses does. A scenario where the coverage is insufficient to cover the cost of replacement can easily result in underinsurance. This issue is resolved by Kin’s platform, which uses market data and periodic reevaluations of underwritten policies to identify potential issues.

Kin can run a lot leaner as a business, with considerably lower expenses, because it can use its software to optimize many elements of the firm. As a result, Kin can pass along the cost savings to its clients, increasing their competition in the industry.

Clearcover

An auto insurance provider called Clearcover takes great satisfaction in using cutting-edge technology to give its clients the finest possible service. Their exclusive ClearAI AI-based tool forms the basis of their technology. Throughout the company, Clearcover makes extensive use of this tool. In terms of quotation, Clearcover’s platform assists clients in obtaining the appropriate coverage according to their particular needs, much as Kin’s. The capacity of Clearcover to handle claims, however, is where the more amazing functionality resides.

The sophisticated image processing feature of ClearAI enables it to instantly assess if an incident is covered by analyzing photos of a damaged car. The customer might receive an automatic payout from the platform once ClearAI verifies their eligibility. Clearcover may now pay a valid claim in as little as seven minutes after it has been fully processed thanks to these features. However, processing a claim with an insurance company usually takes days.

As an insurance firm, Clearcover gains a great deal from company representatives who are successful in selling their policies. Considering this, they have expanded ClearAI to incorporate lead qualification tools. With so many leads to review, there is a lot of noise. These tools assist agents in sorting through it. They can immediately obtain better-quality leads and have a greater likelihood of client retention.

DAIS

In the InsurTech space, DAIS Technology is finally making waves with UnderwriteGPT, a new product built on generative AI and large language models. No insurance is sold by DAIS. The business created a set of resources that insurance firms can utilize. Their product offers may be enhanced, goods can be introduced to the market faster, and customers will receive an overall better experience thanks to this suite.

Kin and Clearcover notwithstanding, DAIS intends to promote UnderwriteGPT as a mechanism to expedite the underwriting procedure and enhance risk evaluation, culminating in superior policyholder coverage and price. DAIS and The Paladin Group, a top digital brokerage with a focus on transportation and cutting-edge risk management solutions, collaborated to create UnderwriteGPT. Because UnderwriteGPT is still in the early stages of becoming ready for the market, the company has only provided limited information on what it does explicitly.

UnderwriteGPT has been in confidential development for approximately a year, and its public unveiling marks a significant milestone. The solution is expected to revolutionize the way brokerages and insurance companies approach policy underwriting.

Insurtech’s evolution: Navigating tomorrow’s landscape

The insurance industry has seen tremendous transformation in recent years due to the introduction of contemporary technology. Businesses like DAIS Technology, Kin, and Clearcover have been setting the standard for using AI to transform the sector. With technology developing at a never-before-seen rate, the opportunities for creativity are endless. Leaders in the sector aren’t scared to think outside the box, from wearable technology that analyzes health data and modifies premiums accordingly to AI-powered customer support. There are a lot more insurtech innovations to come that will benefit both insurance firms and policyholders.

January 24, 2024
Featured General Insurance

About 420,000 agents worked in the insurance sector in the United States alone in 2021. Over most of the insurance industry’s development, this profession was intrinsically related to the essence of what insurance was all about.

Insurance agents now worry that they could soon be completely replaced by automated systems as the growing insurtech cluster and related firms strive to optimize efficiency and increase automation wherever the market permits.

Agents do not have to suffer because of an industry that is unavoidably evolving.

As dependable individuals who are prepared to intervene when their clients most need it, insurance brokers provide an invaluable human touch. But they also need to be ready to accept the very automation and technology that pose a danger to them and learn how to make the most of these resources to enhance their productivity.

Establishing confidence

For customers, insurance brokers can still be quite important. Agents provide policyholders with a physical point of contact, easing the pressure of interpreting complex, perplexing policies, and providing the reassurance of a personal relationship.

People who connect with their insurance policies are frequently experiencing a crisis, therefore it is doubtful that they are in the right frame of mind to deal with chatbots or automated phone systems. Human interaction is still fascinating even as the justification for automation or self-service digital experiences becomes stronger. Even when there is a delay, almost 60% of customers still choose chatting with a live person over a chatbot.

When it comes to building trusting relationships with clients and policyholders, human agents’ empathy and humanity continue to be significant advantages. This is a business requirement that technology just cannot match.

Adaptation essential for agents

Insurance agents, however, cannot be saved by empathy alone. Today’s productivity and information flow are changing quickly, even while nothing has altered in terms of phone etiquette or the skill of explaining policies to clients. To stay up, agents need to be ready.

The ecosystem’s early adaptation and investment in the future by leveraging technology to improve process efficiency across the value chain and accelerate overall growth is encouraging.

While human touch is still important, 41% of policyholders said they would drop a supplier who doesn’t have enough digital capabilities. This means that agents who implement digital technology will have a difficult time keeping consumers. The fact that agencies with high technological adoption rates grew on average by almost 60% more than those with low adoption rates is therefore not surprising.

There is a negative aspect, though. Because legacy insurers still set the standard for much of the sector, insurtechs and other disruptors in it must accept that these companies are unlikely to completely transform their business operations. Although new entrants in the insurance industry must integrate innovation along established paths, the insurance ecosystem still significantly depends on agents for success, just as legacy firms must adjust to new modes of operation.

Discovering the ideal tech solution

It is a foolish endeavor to adopt new tech tools merely to stay ahead of the curve. Insurance agents, however, must choose their technologies carefully and with purpose. Is the goal to attract new clients? Getting in touch with those who already exist? Agents must determine their target market, evaluate their needs, then implement technology that meets those demands.

Start by considering the preferred interaction methods that potential customers prefer, such as phone calls, mobile apps, or websites. Along the policyholder journey, there are a plethora of features and tools to consider, ranging from video conferencing capabilities to online pricing solutions that streamline the onboarding process and more.

Agents may target high-quality leads and address lingering issues before they become unmanageable with the help of other helpful tools like smart data analytics. In addition to being exceptionally good at assessing consumer risk and creating highly customized products, data analytics may even identify fraud by identifying minute differences that the human eye might miss.

Molding tomorrow’s landscape

For professionals of all stripes, the timeless advice to “Change or go home” is crucial in a quickly changing environment. In fact, agents could prevent replacement.

Today’s insurance agents will not only assure their future in the business, but they will also be able to shape it by utilizing the enduring need for human connection and a personal touch in conjunction with the adoption of technology and digital methods to maximize efficiency and effectiveness.

January 9, 2024
Featured General Insurance

Customers of property insurance across the country are facing a difficult situation because of insurers restricting new business and sending termination warnings because of the rising costs of heightened catastrophic occurrences driven by climate change.

Strict regulatory limits have driven insurers out of high-claim jurisdictions like California and strained the business models of property and/or casualty insurance. Specifically, the laws in effect today, which are based on laws issued in 1988, prohibit insurers from factoring in reinsurance costs and from taking climate change into account when calculating rates. It has become more challenging for insurers to fairly value property hazards as a result.

People are in a difficult situation because P&C insurers are leaving California. The California FAIR Plan and other backstop coverage choices are becoming increasingly popular among individuals who are having difficulty finding inexpensive insurance. Over the past few years, however, the number of customers using the FAIR Plan has more than doubled. Its insolvency would force all California’s regulated insurance companies to split the expenses, which would further incentivize them to move their business elsewhere.

To draw insurers back to the state, California Insurance Commissioner Ricardo Lara has made new regulatory proposals in response. Even though there have been differing opinions on the suggested modifications, they provide consumers and the industry’s comeback some hope.

What changes are being made?

In determining rates, the new regulations would permit insurers to utilize catastrophic modeling that takes into consideration the anticipated effects of climate change, reinsurance costs, and measures to reduce the risk of wildfires. Additionally, the new regulations would force insurers to write a greater proportion of their policies—that is, at least 85% of their statewide market share—into wildfire-prone areas.

The effects of these changes on consumers

To save consumers from unjustified rate increases, California has historically outlawed these modeling techniques. But the 35-year-old state laws are out of date for the sector as wildfires become more devastating.

Relaxing regulations could encourage insurers to return to the state and enable them to better manage their risk of catastrophic occurrences, which would increase consumer competition and possibly aid in long-term rate stabilization. Particularly for houses in high-risk zones, these modifications would also expand the availability of coverage.

The definitive result for property insurance and consumers

Should things stay the same, insurers will keep pulling out of California, leaving customers with no choice but to go without insurance, depend on the FAIR Plan, or purchase excess and surplus lines insurance—which would probably come with a hefty premium load.

This needs to change, and these new regulations might represent a significant advance for customers. They are merely the start of initiatives to reach a settlement with insurers, bring back customer access to coverage, and revitalize the market. They would also give the FAIR Plan much-needed relief, allowing it to function once more as a last-resort alternative. However, there are several drawbacks with them, including higher premiums and a lack of openness on the data that insurers would use to consider climate change.

By December 2024, Lara wants to have the regulations written. All parties involved in this process will need to work together continuously, but it is a significant step in the right direction and a major shift in the industry.

January 3, 2024
Business Featured General Insurance

Within the quickly developing insurance and insurtech industries, “big data” is becoming a widely used term. Professionals in the insurance sector examine how it is spurring innovation and its ramifications for risk assessments, policy pricing, and client relations.

Huge amounts of organized and unstructured data that are gathered from many sources and, upon analysis, can yield insightful information that helps inform business choices and boost operational effectiveness are referred to as “big data.” However, what does it signify for the sector and how is it changing the way that insurance is traditionally provided?

Insurance companies view big data as a treasure trove. It is derived from a variety of sources, including risk information, social media interaction, internet behavior, claim histories, and client demographics. Even real-time data from networked devices, such as automobile telematics and smart home systems, is included.

The ability of the sector to gather, handle, and analyze this data on a massive scale is radically changing how insurers evaluate risk, set policy prices, and communicate with clients.

According to industry reports, big data is rapidly changing the insurance sector by facilitating more precise risk assessment, enhancing customer experience, expediting the claims handling process, and improving underwriting and pricing.

Innovative domains

There are various applications for big data. Managing risks is one of the main applications.

Insurance companies can obtain a better knowledge of the risks connected to various coverage options by evaluating vast volumes of data from numerous sources. Insurance companies may be able to better manage the risk exposure in their portfolios and price insurance with greater accuracy thanks to this.

Unfortunately, conventional data processing methods are often unable to readily process and interpret these massive amounts of data because of their complexity and vastness. This data is being analyzed by insurance companies using sophisticated analytics technologies.

The examination of this data aids insurers in customizing their policies by providing a deeper understanding of the risks connected to various business kinds. Big data helps insurers to manage risks more efficiently, make data-driven choices, and improve customer service—especially in the context of cyber insurance. There will likely be more creative applications of big data in the insurance sector in the future as machine learning and data analytics advance.

Others concur that big data, which is being used in a variety of insurance-related sectors like pricing, underwriting, claims administration, risk reduction, and fraud detection, can assist insurers in making better decisions and streamlining their operations.

Big data is being used, for instance, in pricing and underwriting to more precisely assess risk and spot trends that can influence future claims. Underwriters are in a better position to assess various risks when they have access to more data.

Big data can be utilized in claims management in other contexts to detect fraudulent claims and enhance the effectiveness of claims processing. With the ability to handle claims more quickly and precisely, operational efficiency has increased, and customer satisfaction has increased.

AI unleashed: Is the genie out of the bottle?

As per the analysis of industry experts, the insurance sector must remain inventive and adaptable as client demands change. Among these is the effective use of big data.

Big data’s importance has grown in tandem with technological advancements. The importance of data in insurance, for instance, has been and will continue to be influenced by major technical developments such as distributed ledgers. Any additions or modifications made to a distributed ledger are instantly duplicated to all participants, as it is a database that is shared and synchronized across numerous sites, institutions, or geographical locations. The technology they employ is the same as blockchain technology.

A typically analog sector will also be shaped by immutable data ledgers. By ensuring that the data is accurate from the start, this will pave the way for more efficient risk transfer and improve the client experience.

The craze surrounding ChatGPT is a prime example of the industry’s recent surge in interest in and application of generative AI. Insurtechs have been reported to be able to power better client experiences already thanks to AI, especially in terms of expediting access and guaranteeing a more tailored experience for each customer.

In terms of generative AI utilization and implementation, the last quarter was undoubtedly a “genie in the bottle,” and as businesses and the industry grow accustomed to privacy and security, generative AI will probably find its way into a wide range of use cases.

Experts in the field of cyber insurance pointed out that, in the face of a sharp increase in cybercrime worldwide, technological advancements have played a critical role in the use of big data. The insurance industry as a whole is striving to adopt new technologies in order to control the cyber risks associated with its insureds, as both insurers and brokers are finding it difficult to keep up with the quickly growing cyber vulnerabilities.

Large volumes of data can be processed and analyzed rapidly and effectively by new technologies like machine learning and AI-powered tools. This gives insurers and brokers access to insights and the ability to spot trends that would be challenging and time-consuming to find using conventional approaches.

Next frontiers in the realm of big data

The insurance sector has found new prospects for growth and improvement thanks to the use of big data. Future decisions about risk underwriting and transfers are expected to be further solidified by it, according to industry sources.

In the realm of cyber insurance, insurers will be better equipped to assess and price risk thanks to big data risk analytics’ capacity to handle vast amounts of data and identify trends and patterns. This will create a more stable and long-lasting cyber insurance market by giving insurers quick access to actionable threat intelligence.

Regarding the use of big data in insurance going forward, many more encouraging opinions have been voiced. Large data has the promise of enhancing consumer experiences, streamlining processes, and enabling even more precise risk assessment. The insurance industry is expected to grow further as insurtechs search for fresh data sources and techniques for delivering it to insurers.

In terms of data, technology, and transparency, the insurance sector may lag the larger financial services sector, therefore innovation and digitization are highly anticipated in this space. That means there’s a great chance to improve the consumer experience by addressing inefficiencies and fostering growth.

As we move forward, many businesses would like to see more insurtechs and insurance companies work together so that the latter can take advantage of the latter’s vast industry knowledge and state-of-the-art, potent technologies.

Many believe that the insurance sector should make greater investments in data analytics and technology. More connectivity and collaborations across insurtechs would help alleviate the outdated systems that continue to hold back a lot of participants.

December 20, 2023
Business Featured General Insurance

About 70% of youthful workers said that if their expectations for the digital experience were not fulfilled, they would think about quitting the organization.

Policyholders are not the only ones who want the simplicity and ease of use that come with cutting-edge digital experiences and communication equipment. The next generation of insurance professionals will be drawn in large part by innovative digital experiences, according to a survey by Riverbed Technology LLC that surveyed 92% of executives in the financial services and insurance sectors.

A significant portion of CEOs (92%) surveyed stated that investment in digital experiences (DEX) will be a key priority over the next five years due to the expanding significance of this field.

If DEX expectations were not realized, about 70% of millennials and Gen Z employees said they would think about quitting their firm. The same proportion of respondents claimed that a company’s performance, reputation, and productivity may all suffer if these expectations weren’t met. In fact, according to Riverbed, a smooth DEX was valued higher than free coffee and snacks and monthly office happy hours as a workplace bonus.

The cloud and artificial intelligence, according to about half of survey participants, are the most significant technologies that will grow more and more “business-critical” during the next 18 months. App and network acceleration, DEX management solutions, and automation tools are other technologies that Riverbed claims are becoming more and more important.

These days, as more and more digital natives join the FSI workforce, it’s imperative that strong DEX solutions are in place. This is not just to maintain the productivity of Gen Z and millennial employees, but also to reduce risk, automate procedures, guarantee the efficiency of client financial transactions, and enable top talent to work with greater strategy.

Furthermore, it is observed that although delivering enhanced digital experiences is getting harder, it is good to see that most industry leaders understand the value of DEX and are investing to fix any flaws.

Regarding obstacles impeding DEX advancements, 36 percent of executives stated their organization has sufficient observability tools, while 34 percent cited financial limitations and 32 percent stated they had an excessive amount of data to analyze. Another 29% claimed they lacked the necessary SaaS apps or cloud services to provide a flawless DEX.

While businesses are trying to enhance DEX, 34% of CEOs reported that they are having trouble finding IT staff. Since 94% of survey participants stated that IT is now more accountable for business innovations than it was three years ago, this is impeding business modernization.

Additionally, 45% of decision-makers in the financial services and insurance industries stated that while they have IT personnel to make changes, they lack the requisite skill sets to put improved digital tools into practice. But according to 85% of study participants, they have set aside money for employee retraining.

December 13, 2023
Featured General Insurance Security

The foundation of modern digital services is APIs. Global insurance corporations are creating, implementing, and adjusting APIs at a rate that has never been seen before. These organizations share critical data with partners, consumers, and workers using APIs, which serve as the cornerstone for their online services and transformational applications.

It is not without difficulties, though, as is the case with everything that grows quickly. The proliferation of APIs creates a larger attack surface for malevolent actors, hence opening the door to a myriad of new security concerns. These criminals are persistent and constantly looking for novel and surprising ways to target companies. Organizations used to think that requiring adequate authentication to use an API would be sufficient to discourage attackers and send them elsewhere. However, data from Salt Labs indicates that 84% of attacks were from users who appeared to be legitimate but were in fact attackers who either obtained credentials maliciously or by taking use of already-existing procedures to establish their own acceptable credentials for accessing the API.

The insurance industry, along with the financial services and retail industries, is the most vulnerable, even though the API ecosystem has expanded quickly across all industries worldwide. This article will examine the rise in API attacks in the insurance sector and reiterate the ongoing work that the security and software sectors need to do in this area because malicious actors are always working hard to exploit the present security flaws.

The days of setting up policies by calling insurance brokers are long gone; times have changed. Customers today have different demands and anticipate being able to purchase, set up, renew, and file a claim for their insurance online in one convenient location. The insurance sector, like the financial services sector, depends significantly on APIs to deliver services and drive corporate innovation. The industry has advanced into the current era with the usage of APIs and microservice-based architectures, yet there are still difficulties.

Insurance companies need to meet customer demands by processing and sharing sensitive customer data with numerous third parties, all the while making sure that customers can instantly access, amend, and submit their information via websites and mobile applications. APIs are now crucial to the insurance industry due to this new environment, which also presents new security risks and makes them more noticeable to would-be attackers. In fact, 92% of respondents to Salt Security’s State of API Security for Financial Services and Insurance survey said they had at least one serious security issue involving their production APIs in the previous year—a startling statistic. In addition, the number of insurance companies using cutting edge, AI-driven, API-driven automation technologies to assist the underwriting process, handle client claims, and deliver services has increased significantly because of Covid. As per McKinsey & Company, artificial intelligence has the potential to drastically alter the insurance sector by 2030. Leaders in the insurance industry must now quickly and effectively update, replace, or supplement their current security defenses in order to confront the compounded growing security risks.

Findings from Salt Security’s State of API Security for Financial Services and Insurance show that malicious actors are busily at work, increasingly focusing on insurance APIs. In fact, between the first and second half of last year, there was a tremendous 244% rise in unique attackers. Furthermore, a startling 27% of participants disclosed that they had lately encountered a privacy event or the release of sensitive data, and 17% had encountered a security breach originating from an API.

Insurance companies are transforming at an incredible rate to become more innovative and competitive by adopting API-first architectures and workflows. Although this benefits the sector, it also gives hackers a larger attack surface to work with, which makes it generally easier to infiltrate. Due to the increased attack surface, threat actors are now able to steal account information, compromise insurance claims, carry out fraudulent transactions, and eventually cause service disruptions. Moreover, insurers have the same regulatory and compliance requirements as financial services firms. They risk losing their clients’ trust in addition to facing large fines and harm to their brand from an API assault.

Securing APIs to safeguard digital services has become a corporate concern due to the increase in assaults and the expenses (fines, lost client trust, and reputational harm) involved with API security breaches. In its march toward digital innovation, the insurance industry has reached a pivotal point, and APIs are essential to the development of new insurance services. The time has come for business leaders to think about and put into practice tried-and-true strategies for reducing API risk, utilizing specialized AI-based security defenses for APIs. This will enable insurers to safely harness the power of APIs and maintain their competitiveness in this quickly evolving market while guaranteeing customer loyalty, compliance, and overall performance.

December 7, 2023
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